Japanese automaker Mitsubishi has admitted it manipulated pollution data in more than 600,000 vehicles (AFP Photo/Toshifumi Kitamura)

Mitsubishi Motors shares nosedived again Thursday as panic selling wiped about $2.5 billion off the automaker's market value in response to its shock admission that it cheated on fuel-efficiency tests.

The embarrassing revelation is the latest in a string of recent scandals to hit Japanese firms, while German giant Volkswagen struggles to restore its badly dented reputation after a massive emissions scandal.

The news has also raised questions about Mitsubishi's future as it faces the prospect of huge lawsuits and fines.

On Thursday, the embattled stock went into freefall, plunging to 583 yen ($5.31) in Tokyo, down 20 percent, after it dived 15 percent on Wednesday when the news first broke.

Japanese transport ministry officials descended on a company research and development centre Thursday morning, as the government slammed the maker of Outlander sport utility vehicles and Lancer cars.

"This has critically damaged consumers' trust and it won't be tolerated," top government spokesman Yoshihide Suga said Thursday. "It's an extremely serious issue."

Mitsubishi admitted Wednesday that unnamed employees rigged tests to make some of its cars seem more fuel-efficient than they were in reality.

The company said it would halt production and sales of the affected vehicle models -- mini-cars sold in Japan including some made for rival Nissan -- and warned that the number of cars involved in the scandal would likely rise.

Mitsubishi's top executive conceded Wednesday that the crisis would take a bite out of its bottom line, as the firm widens an internal probe to cars sold overseas.

"This is not a simple problem and we need time" to assess the impact, president Tetsuro Aikawa told a news briefing.

"But I'm sure there will be an impact. The damage will be big."

The collapse of Mitsubishi's stock on Wednesday was its biggest one-day plunge since 2004.

At that time, Mitsubishi was struggling to launch a turnaround as it teetered on the edge of bankruptcy, hit by a lack of cash and a series of huge recalls linked to deadly defects.

Bailouts by the Mitsubishi group companies saved the automaker, which had covered up defects linked to flawed axles that could lead to wheels coming off the car.

Regulators must now deal harshly with Mitsubishi to ensure it overhauls a corporate culture that prizes unwavering loyalty to the company even more than many Japanese firms, likely a key driver in the latest cover-up, one expert said.

"Just as Volkswagen got slapped with very severe sanctions...Mitsubishi also needs to face tough measures so it's guaranteed that the company will change," said Hideyuki Kobayashi, a business professor at Hitotsubashi University, who authored a book about the company's struggles a decade ago.

The falsified figures were discovered after Nissan found inconsistencies in fuel-economy data.

Japan's number-two automaker said it would halt sales of the affected mini-cars, but added that it had no immediate plans to change its business relationship with Mitsubishi.

Mini-cars, or kei-cars, are small vehicles with 660cc gasoline engines that are hugely popular in the Japanese market, although they have found little success abroad.

Mitsubishi sold more than a million vehicles at home and overseas in its latest fiscal year.

The incident is another black eye for Japan Inc. after auto parts giant Takata plunged into crisis after an exploding air bag defect was linked to at least 11 deaths.

Vast conglomerate Toshiba is trying to recover from a huge accounting scandal.

Volkswagen, meanwhile, has been hammered by the global scandal that erupted when it emerged that it had installed emissions-cheating software in 11 million diesel engines worldwide.

South Korean automakers Hyundai and Kia in 2014 agreed to pay $100 million to settle a US government investigation into exaggerated fuel efficiency on 2012 and 2013 car models sold in the United States.